Shanghai banks told to limit loans to property developers - report

SHANGHAI Oct 14 Banks in China's financial hub
Shanghai have been asked by authorities to limit loans to
property developers for land purchases and to scrutinize
would-be borrowers suspected of trying to access mortgages by
getting divorced, the Shanghai Daily reported on Friday.

The steps were the latest in a string of measures around the
country to try to cool a property market seen at risk of
overheating.

Quoting unidentified commercial bankers, the newspaper said
banks were told that housing developers should pay at least 30
percent down on residential projects instead of relying on bank
loans.

It said some developers had put only 10 percent down on
projects and raised the remaining funds through bank and
gray-market loans.

Banks were also asked to reject mortgage applications of
people who had divorced within three months, it quoted an
internal filing from a Shanghai-based rural commercial bank as
saying.

A property price rally has prompted a home buying frenzy in
parts of China, in some cases prompting couples to get divorced
to circumvent buying restrictions and invest in multiple homes.

Police last month detained seven property agents in Shanghai
for spreading rumours of plans for a new government regulation
that caused a rash of divorces and a rush to buy new
homes.

On Wednesday, the Shanghai branch of the China Banking
Regulatory Commission, the country's banking regulator, held a
meeting about rising housing prices with major lenders, the
newspaper reported.